Hepatitis C virus (HCV) infection in humans is almost invariably associated with viral persistence leading to chronic hepatitis, which in turn predisposes the infected individual to cirrhosis and hepatocellular carcinoma. CD8+ T-cells play a pivotal role in controlling HCV infection; however, severe CD4+ and CD8+ T-cell dysfunction has been observed in chronic HCV patients. This suggests that HCV may employ mechanism(s) to evade or possibly suppress the host T-cell response, although the molecular details have remained elusive. In exploring the possible evasion mechanism(s), we discovered that interaction of HCV-infected hepatocytes with macrophages (M?) and dendritic cells (DCs) of the innate immune system inhibited their ability to produce proinflammatory cytokines. Moreover, the soluble factor(s) released from HCV-infected hepatocytes or the secreted core protein altered APC differentiation and function by the activation of STAT3 transcription factor, which is a crucial event in promoting the induction and expansion of myeloid-derived suppressor cells (MDSCs). Intriguingly, APCs exposed to HCV exhibit the MDSC phenotype with downregulation of HLA-DR and are able to inhibit IFN-? production by both CD+4+and CD8+ T-cells upon APC-T cell co-culture. Based on these findings, we hypothesize that HCV promotes the induction/expansion of MDSCs via STAT3 activation and that these regulatory APCs in turn suppress T-cell responses. First, we will characterize the role of HCV- induced STAT3 activation in altering APC differentiation and function. Second, we will determine the impact of HCV-mediated APC dysfunction on impairing T cell responses. Lastly, we will explore the mechanism(s) of impairment of T cell responses via HCV-induced APC dysfunction and potential therapeutic intervention. The work proposed in this application will elucidate the mechanism by which HCV evades host innate immunity, resulting in chronic viral infection and its life-threatening complications. We believe that results of these studies will provide a basis fr the rational design of vaccines and novel therapeutics against HCV infection in humans by bypassing the immunosuppressive effect of HCV.